Corporate-Credit Outlook Weakens to Worst Since Crisis, S&P Says

[marmar]

(Bloomberg) The outlook for corporate borrowers worldwide is the worst since the global financial crisis, according to Standard & Poor’s.

The proportion of issuers facing a potential downgrade at the ratings company surpasses possible upgrades by the most since 2009, according to a Jan. 11 report. The gap also widened the most since the financial crisis in the past six months, S&P said.

The corporate-debt outlook has darkened because of slower growth in China and a commodity rout that’s cut prices to the lowest since 1999. The slump has also driven corporate defaults to the highest since 2009 and led to investors demanding a 8.7 percent yield to hold junk bonds, the most in four years, according to Bank of America Merrill Lynch index data.

There may be “significantly” more ratings downgrades than upgrades in 2016, S&P analysts led by Melbourne-based Terry Chan wrote in the report.

S&P is considering cutting ratings at 17 percent of the companies it covers, as of December, the report said. That compares with possible upgrades for 6 percent of issuers. The 11 percentage-point gap is more than double the level in June 2014, the report said. .................(more)

http://www.bloomberg.com/news/articles/2016-01-12/corporate-credit-outlook-weakens-to-worst-since-crisis-s-p-says

[Kelvin Mace]

1. Since S&P always overstates ratings

the fact that they are now saying that the ratings are bad would indicate that in reality the ratings are catastrophic.

[dixiegrrrrl]

2. The wheels seem to be coning off...

I wonder if anyone is noticing.